03/18/2010 05:12 am ET Updated Dec 06, 2017

Not 21 yet? No more credit cards for you starting Feb. 22

My college-aged son had no idea, so you might not either: on February 22, 2010, you can't get a credit card if you're under 21 unless an adult co-signs on your card or you show proof that you can pay off the debt.

This is a provision of the Credit CARD Act of 2009, which you can read more about here

It's unfair. At age 18, you can vote for president, go to jail as an adult and join the army. But beginning Feb. 22, you can't get a credit card. Why? Because some banking executives got greedy and Congress passed new restrictions.

But this provision gives you a chance to rethink how you manage your college and work finances. Now is the perfect time to look at other options, both new and old, for managing your money responsibly. Here are a few choices:
  • Deposit money for a secure credit card. A1,000 deposit gives you a line of credit between500 and1,000. You pay on your debt monthly as with a regular credit card. If you default on a payment, the card issuer can recover the amount from your deposit. Your deposit acts as the "means to pay off the debt" stipulated by the law. The benefit is that most issuers report regularly to the major credit bureaus, so you start building a positive credit history. Here's the catch: fees and service charges exceed the already skyrocketing fees for ordinary, non-secured credit cards. Also, the issuer typically does not use your deposit when you miss one or two payments but uses it when closing your delinquent card when the balance exceeds the credit limit. In this case, you have an unpaid debt, which is a negative hit on your credit record, and you lose your deposit as well.
  • Get a credit card with your parent as a co-signer. That's probably what banks would love you to do. Be aware though that your card statements will most likely be mailed to your parent's address, not to you. So, be prepared to communicate with your parent about your transactions and about paying the card bill. Also, you parent's hard-earned and long-standing credit record is now in your hands: any misstep on your part will hurt your parent.
  • Skip credit cards altogether and get a checking account with an ATM or debit card. There is no risk to your parent or your own credit record. However, this does not come cheap. A recent survey from financial advisory firm Bretton Woods Inc. available here, shows that it will cost you between $200 and $350 per year in fees to have a simple checking account, not to mention minimal opening balance requirements imposed by many banks. And if you think that "free checking accounts" are really free, read about how banks are actually making them seriously expansive with the "overdraft protection" fees.
  • If the Internet is part of your daily life, consider opting for an online prepaid card account. (In the interest of full disclosure, my company offers this kind of account.) This is similar to a checking account plus debit card, but without overdraft fees or physical bank buildings. You have probably seen prepaid cards sold on J-hooks in many stores, but those retail cards do not bear your own name and limit how many times you can reload them. You want to go for the personalized accounts that you apply for online. No credit record necessary: all you need is a social security number and a valid address in the US. You receive a Visa or MasterCard branded card in the mail, which you load with direct-deposited salaries, cash or bank transfers from your parents. Some of these online prepaid card accounts offer cell phone and Facebook access, and also the ability to have paper checks sent on your behalf to pay the rent to your landlord.
Here is a quick summary of the pros and cons of each option:


So some politicians and bankers are out to limit your credit card options. You're a young, smart generation that can do things better anyway.